High-Net-Worth Investors Plan to Boost Hedge Fund

NAPLES, Fla. (HedgeWorld.com)--A new survey of family offices revealed that more than half of the families surveyed plan to increase their hedge fund investments in...

By Staff Writer|April 16, 2003 at 08:00 PM

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NAPLES, Fla. (HedgeWorld.com)–A new survey of family offices revealed that more than half of the families surveyed plan to increase their hedge fund investments in 2003.

The Institute for Private Investors, an educational and networking organization for families with substantial assets and their advisers, and LJH Global Investments LLC completed the Family Tracking Performance Survey of the IPI membership.

Members are required, as either a family or as an individual, to have investable assets in excess of US$10 million. About 665 individual members represent 300 families. Four out of 10 members oversee US$200 million or more, and one-third manage between US$50 million and US$200 million. LJH helped IPI examine the group’s survey data and has been a leaders council member since 1995.

They found that 37% of the 71 respondents invest in alternative investments, including hedge funds, private equity, illiquid investments and venture capital. And 53% of the group said they planned on more hedge fund investments this year. An average of 18% of the families’ individual asset allocations are in hedge funds, as compared to the 34% in equities and 20% in fixed income. These investors use 12 managers on average.

According to the survey, most believe that hedge funds should be a separate asset class. A total of 37% said that hedge funds are a distinct asset class, and an additional 40% said that certain strategies lend themselves to being separate asset classes. In the minority were the families that believed hedge funds should be part of the equity allocation (16%).

Consultants and funds of funds are used by 49% of the investors surveyed. According to IPI, most of the respondents were satisfied with the advice they received from their advisers.

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